Building Capitalization Rate


Definition of "Building capitalization rate"

John Paulsen real estate agent
John Paulsen Crye-Leike Coastal Realty

Rate of return of capital invested in building improvements. Is segregated from land investments and provides a method of separating property income streams between improvement and land investments. Normally the yield is stated as an annual rate of profit per dollar of investment. Three factors are necessary in order to correctly compute the building capitalization rate: (1) The amount of the investment. (2) The size and duration of the income stream. (3) The eventual resale proceeds.

Have a question or comment? We're here to help.

 
 
 
*** Your email address will remain confidential.
 
 

Search Real Estate Terms

 

Popular Real Estate Terms

Blanket Rate

Uniform charge for transportation and delivery of household items to a homeowner within a particular locality. ...

Property Damage Liability Losses

Losses arising from damage to or destruction of property. ...

Wraparound Mortgage (trust Deed)

Also called all inclusive trust deed (AITD). A mortgage (trust deed) that encompasses existing mortgages and is subordinate to them. The existing mort ...

First User

Initial user of real estate property, such as the first tenant in a newly constructed apartment building or office building ...

Principle Of Substitution

Highest amount a property is worth equal to the amount that would have to be paid to buy equivalent property in the market place. ...

Sales Price (gross)

The price the seller charges the buyer for real estate. The net sales price received by the seller will be less after taking into account the selling ...

Popular Real Estate FAQ

What Is A Front-end Ratio?

A front-end ratio is a ratio of the borrowers monthly housing expenses-including principal, interest, property taxes, and insurance (OITI)-compared to ...

What Does The Real Estate Settlement Procedures Act (RESPA) Require?

The Real Estate Settlement Procedure Act requires the lender to disclose certain information about a loan, including the estimated closing costs and A ...

What Is A Housing Ratio?

A housing ratio is the percentage of your housing payment (principal, interest, taxes, and insurance) to your monthly gross income. Lenders use this r ...

What Is A Down Payment?

A down payment is the money you pay up front for the purchase of a home. ...

What Is Accession?

The right of a property owner to have and enjoy all of the advantages of property ownership including air right, mineral rights, riparian rights, and ...

What Happens When A Property Starts To Depreciate?

When a property depreciates it declines in the value of the property due to poor location, dilapidation, or other factors. ...

Read why Real Estate Agent rates 5 Stars in 10 Agent Reviews
Read Reviews

Agents join here
Add real estate terms app
on your Website

Real Estate Advice

Spring Landscaping Ideas to Improve Curb Appeal and Sell Your House DIY Home Improvement to Increase Your Home Value Moving Tips: House Relocation Stress Free Increase Your Home Value With These Home Improvement Ideas Down Payment: Everything You Wanted to Know

FAQ

What is a lease purchase mortgage? What is Loan Amortization? What is comprehensive homeowners insurance? What is a broker? What do I need to know about Watercraft Insurance?